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Francesca Carlesi, co-founder and CEO of Molo, said the digital mortgage lender is now in a “better position” and has “learned our lessons” after temporarily suspending its buy-to-let (BTL) lending earlier this year have “funding questions”.
Lending was suspended in April due to “recent changes in capital markets” from where Molo gets its funding, rather than through customer deposits as is the case with bank lenders.
The changes were due to both “peak inflation” and a rate hike implemented by the Bank of England.
Speaking at the Lenders Live LinkedIn panel hosted by the Knowledge Bank, Carlesi explained: “You don’t expect it, but it happens. Capital markets are probably less patient than other types of financing and unfortunately some of them overreact to market changes.”
“As a result, we negotiated that we would just keep financing mortgages because we didn’t have to offer our customers for no reason and we had no choice but to reevaluate some of the outstanding offers.”
“We did this because we wanted to be able to fulfill any and all offers to our customers and I am proud to say that despite the severe problems that our financiers created for Molo, we are still in were able to fulfill all outstanding offers Inevitably, given the sudden change, we had to undertake a significant re-evaluation. We didn’t reassess the entire pipeline, we only reassessed the pipeline for three weeks so probably 30 or 40 clients in total and now we have put in place a new line of funding which has allowed us to complete the completions on normal terms and also to resume giving us access to a more stable and reasonable source of funding than before.”
Carlesi said: “Right now the storm is over but it was quite an intense moment. In a way, we had no other choice. The good news now is that we have set things up even more securely than before.”
From an agent’s perspective, she noted that the situation was “not great,” but explained that Molo “has been trying to communicate with everyone, like e.g. e.g. clients and brokers, and explain the reasons for this”.
“In a way, we had no other choice. The good news now is that we have set things up even more securely than before.”
Ying Tan, Non-Executive Director and Moderator of Knowledge Bank, stated, “Communication with brokers is essential when things like this suddenly happen. There are many factors that are beyond the control of lenders and certainly brokers, but it is really important that communication and transparency are key to minimizing this shock.”
Meanwhile, Craig McKinlay, new managing director of Kensington Mortgages said: “The market is tough and there are no clear, easy answers. Essentially, it’s all about choosing your poison and deciding the pros and cons. You have to find a way to deal with it as best you can.”
Marketing gimmicks or lender empathy?
Earlier this month, due to the high volume of mortgage applications, Santander granted a temporary one-month extension to the mortgage offer for the remortgage and purchase.
The Lenders Live panel discussed whether they thought this type of offering was a “marketing gimmick” to build goodwill, or whether the lender is showing genuine empathy towards customers and brokers during this challenging time.
Coreco CEO Andrew Montlake described it as “a great move” that he finds “really interesting.”
“I’d like to see old lenders really understand that the process is now being extended. You used to be able to go from application to completion in three months, but now that has shifted to four, five, or even seven months. The whole process gets longer as lenders get swamped.”
“As brokers we fully understand and understand that we should not abuse lenders, we should celebrate lenders who give us the 48 hours or do things like Santander did. I don’t think it’s a gimmick, I think it’s a real understanding of what’s happening in the market and it’s appreciated.”
“It also shows that lenders value brokers and understand what is at stake. Yes it gives them a little bit more time to process stuff, but that’s a reasonable thing, it’s very welcome and I’d like to see other lenders follow suit.”
Steve Griffiths, Mortgage Lender’s sales and product director, suggested that “there is no bad side to what Santander has done”.
“I think a great, great initiative, it might be a bit more complicated for smaller and more specialized lenders to replicate. However, we’re looking at technology and processes and what can we do to ensure that this customer journey is as smooth as possible, whether it’s an initial offer, an offer extension or whatever,” adds Griffiths.
